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Telegram-Linked Toncoin Token Sheds $2.7 Billion After CEO Pavel Durov Detained
Toncoin, the token of The Open Network, slid more than 20 percent after Pavel Durov was reportedly taken into custody at a Paris airport on Saturday.
Photo Credit: Reuters
TON’s rise spurred speculation that Telegram has a shot at becoming a 'super-app'
Highlights
- Telegram founder Pavel Durov was detained in France on August 24
- Toncoin slid more than 20 percent after Pavel Durov was detained
- Telegram has been called out for weak content moderation
A digital asset from a blockchain project linked to Telegram Messenger LLP has lost about $2.7 billion (roughly Rs. 22,670 crore) in market value, reflecting the uncertainty sparked by the detention of the messaging app's co-founder.
Toncoin, the token of The Open Network (TON), slid more than 20 percent after Pavel Durov was reportedly taken into custody at a Paris airport on Saturday on suspicion of failing to take steps to prevent criminal use of Telegram.
The 10th largest cryptoasset pared some of the drop to trade at $5.58 (roughly Rs. 470) as of 2:11 p.m. Monday in London, but is still down over 16 percent as a result of the drama involving 39-year-old Durov, according to data complied by Bloomberg.
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The Open Network — or TON — blockchain has access to Telegram’s 900 million monthly users via a partnership and seeks to enable services such as in-app payments and games. TON’s rise spurred speculation that Telegram has a shot at becoming a “super-app” in the style of Chinese giants like WeChat.
Venture Backing
The three-year-old foundation behind the project says it's separate from Telegram. But the ties between Telegram and TON turned the latter into one of crypto's most-hyped initiatives. Pantera Capital Management LP in May described a purchase of Toncoin as the firm's largest-ever investment.
Billionaire Durov is also Telegram’s chief executive officer. The Dubai-based company issued a statement saying it abides by European laws, including the Digital Services Act, and that Durov has “nothing to hide.”
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It's “too early to tell” what impact Durov's detention will have on Telegram longer term, said Richard Galvin, co-founder of hedge fund DACM, which purchased TON tokens in a private round in early 2023. The weekend market reaction “factored this uncertainty into the TON price” for now, he added.
Galvin said the key appeal of the TON-Telegram relationship “is the ability to introduce Telegram's vast user base to crypto functionality,” and that “anything that weakens the competitive position of Telegram is negative for TON.”
Free-Speech Debate
Governments have faulted Telegram's relatively light-touch approach to content moderation for encouraging criminality, while free-speech proponents praise the platform as a venue for open discussion. Telegram is popular with the crypto community, for instance for sharing investment tips.
“While there are some communities who utilise Discord, Signal and X for group communications, the crypto ecosystem does have a disproportionate dependency on Telegram,” said Stephany Zoo, head of ecosystem at market maker Caladan. “If Telegram is affected, there will be reverberating consequences.”
Join the #DigitalResistance, #FREEDUROV with @ton_society. Activate the Resistance Pack:
:one:Share the post below using #FREEDUROV Hashtag
:two:Put :free:emoji in username
:three:Change avatar to Resistance Dog https://t.co/Hn7LGBPMfA— TON :gem: (@ton_blockchain) August 25, 2024
TON on its X social-media account joined the likes of Elon Musk in expressing backing for Durov, reposting the hashtags #FreePavel and #FREEDUROV and changing its logo to the “Resistance Dog” in a further show of support.
The value of assets locked on the TON blockchain surged this year to a peak of $1.1 billion (roughly Rs. 9,230 crore) last month but the figure has now retreated to $667 million (roughly Rs. 5,600 crore), data from DefiLlama show. Toncoin's price more than tripled in the past year and the token has a current market value of about $14.4 billion (roughly Rs. 1,20,880 crore), according to CoinGecko.
© 2024 Bloomberg LP
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